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The Natural Resource Curse Revisited: Is There a Financial Channel?

  • Hattendorff, Christian
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    The paper contributes to the ongoing debate on the natural resource curse, which refers to a negative link between natural resource abundance and economic growth. It shows empirically that resource-rich countries appear to have a less developed financial system and investigates a potential mechanism by applying insights from the finance and trade literature. It tests whether the resource sectors' lower demand of short-term external credit negatively affects financial development of a resource-based economy. This is done with cross-sectional and panel analysis, using an instrument for credit demand based on exogenous geographic determinants. The results, however, suggest that export concentration rather than firms' credit demand drives the detrimental effect of resources on finance.

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    File URL: http://econstor.eu/bitstream/10419/79805/1/VfS_2013_pid_876.pdf
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    Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79805.

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    Date of creation: 2013
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    Handle: RePEc:zbw:vfsc13:79805
    Contact details of provider: Web page: http://www.socialpolitik.org/
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    1. van Wijnbergen, Sweder J G, 1984. "The 'Dutch Disease': A Disease after All?," Economic Journal, Royal Economic Society, vol. 94(373), pages 41-55, March.
    2. Beck, Thorsten, 2002. "Financial development and international trade: Is there a link?," Journal of International Economics, Elsevier, vol. 57(1), pages 107-131, June.
    3. Raddatz, Claudio, 2006. "Liquidity needs and vulnerability to financial underdevelopment," Journal of Financial Economics, Elsevier, vol. 80(3), pages 677-722, June.
    4. Randall S. Kroszner, 2007. "Analyzing and assessing banking crises," Proceedings, Federal Reserve Bank of San Francisco, issue Sep.
    5. Frederick van der Ploeg & Steven Poelhekke, 2009. "The pungent smell of Red Herrings; Subsoil assets, rents, volatility and the resource curse," DNB Working Papers 233, Netherlands Central Bank, Research Department.
    6. Robert C. Feenstra & Robert E. Lipsey & Haiyan Deng & Alyson C. Ma & Hengyong Mo, 2005. "World Trade Flows: 1962-2000," NBER Working Papers 11040, National Bureau of Economic Research, Inc.
    7. Frederick Van der Ploeg, 2010. "Natural Resources: Curse or Blessing?," CESifo Working Paper Series 3125, CESifo Group Munich.
    8. Pagano, Marco & Randl, Otto & Roell, Ailsa A. & Zechner, Josef, 2001. "What makes stock exchanges succeed? Evidence from cross-listing decisions," European Economic Review, Elsevier, vol. 45(4-6), pages 770-782, May.
    9. Christa N. Brunnschweiler, 2006. "Cursing the blessings? Natural resource abundance, institutions, and economic growth," CER-ETH Economics working paper series 06/51, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    10. Do, Quy-Toan & Levchenko, Andrei A., 2006. "Comparative advantage, demand for external finance, and financial development," Policy Research Working Paper Series 3889, The World Bank.
    11. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
    12. Xavier Sala-i-Martin & Arvind Subramanian, 2003. "Addressing the natural resource curse: An illustration from Nigeria," Discussion Papers 0203-15, Columbia University, Department of Economics.
    13. Enrico Berkes & Ugo Panizza & Jean-Louis Arcand, 2012. "Too Much Finance?," IMF Working Papers 12/161, International Monetary Fund.
    14. Head, Keith & Mayer, Thierry & Ries, John, 2008. "The Erosion of Colonial Trade Linkages After Independence," CEPR Discussion Papers 6951, C.E.P.R. Discussion Papers.
    15. Berglof, Erik & Lehmann, Alexander, 2009. "Sustaining Russia's growth: The role of financial reform," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 198-206, June.
    16. Jean-Philippe Stijns, 2003. "An Empirical Test of the Dutch Disease Hypothesis using a Gravity Model of Trade," International Trade 0305001, EconWPA.
    17. repec:ner:tilbur:urn:nbn:nl:ui:12-3125515 is not listed on IDEAS
    18. Alexander Plekhanov & Sergei Guriev & Konstantin Sonin, 2009. "Development based on commodity revenues," Working Papers 108, European Bank for Reconstruction and Development, Office of the Chief Economist.
    19. Nili, Masoud & Rastad, Mahdi, 2007. "Addressing the growth failure of the oil economies: The role of financial development," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(5), pages 726-740, February.
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